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June 30th, 2018

Welcome to my first blog. I’ll be discussing biopharmaceuticals and other topics. I am not recommending any stocks or making investment advice. This is merely me “thinking out loud”. I’ll try to mark sections clearly for those who are here for industry commentary as compared to my personal life.

BIOPHARMA
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–Tesaro and Jazz sold products they don’t want anymore. For those that business, this was noteworthy.

–Recordati’s sale to private equity marks the probable end of an era, but we’ll see if the family sticks around. An incredibly well managed roll-up for the naysayers out there. Rollups are best done slowly (see Berkshire, Loews, but not Valeant).

–Global Blood Therapeutics intrigues me. I will write in further detail in the near future.

–SEL-212. I think this drug should do well, take new patient starts away from Krystexxa. Not a huge problem for Horizon or anything, but notable.

–Novartis’ much-telegraphed sale of Alcon and the continued implosion of GE reminds us conglomerates are more out of fashion than probably at any point in the history of business. This flies in the face of mechanical logic, but practically makes sense. Finding good managers is hard (I’ve maybe found a very small handful of decent managers out of close to 1000 I’ve employed over the years) and conglomerates can only work if you have an engaged CEO (about 5% of CEOs) and engaged managers (less than 5%? less than 10%?), which probability tells you is far lower. The flipside is you get enormous diversification and cash flow stability. Even Bayer pruned some assets, but Berkshire continues to prove everyone wrong. Anyway, I’d rather have a well-managed conglomerate than a well-managed single-focused MNC anyday. Vasella’s failure in buying Alcon was the asburd price paid at the time. Now, divesting it for half the purchase price (~10 years later!) is a sad day for his legacy. The purchase price was $50 billion, but including opportunity cost, the company lost $50 billion on Alcon ($25b asset value, $25b lost opportunity). Given Novartis is still top 5 big pharma, a great performance from the rest of the business.

–In teaching discount rates to some of the guys here, we find dogma like ‘sovreigns always have less default risk than corporates’, when obviously most S&P 100 companies have lower default risk than the Eastern European countries I come from. Or my notion that a conglomerate should always have (all else being equal) less default risk than an industry-focused company. Certainly GE has more default risk than Amgen. You can slap together a lot of low-margin businesses with leverage and you’re far less safe than a well-run industry leader. But, ceritus paribus, the Novartis move is risk-neutral since healthcare conglomerates aren’t really conglomerates. Having an eye healthcare business isn’t particularly diversifying other than somewhat eliminating concentration risk which naturally comes with scale. GE selling Healthcare markedly increases risk, in my eyes. Any precision that comes from better operational focus is overwhelmed by the idea that one of their highest-return businesses is being spun off. Companies need to weather bad times. There’s a reason Berkshire Hathaway, the consummate rollup/conglomerate (dirtiest words possible) bailed everyone out in 2008.

–Alexion’s new antibody should position the company for further complement growth. No one is going to show up and eat their lunch. Having said that, owning this stock is a labor of love (actually, that doesn’t exist in finance!) similar to owning IDPH in 2002 (for you fellow old-timers!). In Idec’s case, you watched great growth of Rituxan but were always wondering “what’s next”. Alexion has their work cut out but sometimes the best solution is to just grow and grow with your middle fingers proudly displayed (a bit of AbbVie’s solution to product concentration risk).

Association of Serum Retinol-Binding Protein 4 Concentration With Risk for and Prognosis of Amyotrophic Lateral Sclerosis. Rosenbohm et al. JAMA Neurology 2018.
Embarassing this got published. Look at the delta in serum RBP4 between groups and you tell me that is of any value.

Genome-wide association study of positive emotion identifies a genetic variant and a role for microRNAs. Wingo AP et al. Mol Psychiatry 2017.
Less fun paper than it sounds.

PERSONAL
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I have around 38 months to go assuming no success on an appeal. I spend most of my time reading. A newspaper misreported that I’m ‘buff’. This is not the case. Oh, the Wu-Tang album is still in my possession. As are all of my assets. I couldn’t have a lower opinion of newswriters now that I’ve had folks report on me. It’s astonishing, really. I understand that not everyone can be capable or excel at their chosen career, and the reporting of occurrences and chronicling of history is not a vitally important task to those charged with it. So, don’t pay too much attention (an admonishment to the reader and a reminder to myself). Anyway, the fate of the Wu-Tang album remains to be seen, but the choice is distinctly mine. I’m a bit frustrated by the Clan’s insistence on making a further album. I was told this would be the final work–I would have never purchased ‘Shaolin’ if that representation was false. That sounds like a violation of a certain section of Title 18 I’m familiar with, come to think of it. Anyway, I’ll decide at some point if I want to sell the album. If a higher-return troll opportunity occurs, I just might.

What else? Politics seem to be tearing this country apart. I think both sides have to start capitulating or perhaps California/NYC should become a special entity with their own federal government. The rest of the backwards nation will have to make do. It’s more practical than what we have going on. Same federal taxes but less whining. Just thinking way outside the box 🙂

You probably won’t find me talking too much about jail as I think it’s in bad taste. This will undoubtedly be read my inmates and staff and it’s easier (and safer) for me to just avoid certain topics. The only thing I can probably say is I miss my family, friends and cat, roughly in that order.

Well, this will be a living project. If you have any advice, like, “less this and more that”, leave some comments or email martin@thotpatrol.com (my people will slowly deliver this email to me in the form of printed snail mail — takes about 2 weeks from your email until I get it in the actual paper mail). I write this message on our “TRULINCS” prison email system to a friend. That friend posts it on the blog. Hope you enjoy this!

10 thoughts on “June 30th, 2018”

I think you are the funniest prankster this world has ever had the pleasure of witnessing. Your antics and the ensuing headlines, simply put, are a riot. And that sly, knowing smile you shoot at your opponents when you are intentionally trolling powerful people on camera? PRICELESS.

I still remember the reaction I had when the mainstream media selected you as their villain of the month. They pretended to hold their nose and grilled you on a live television split-screen interview for increasing the price of some pharmaceutical medication used to treat HIV. They had the nerve to suggest, in so many words, that you were the most evil being that our system of capitalism has ever produced. This implication made me wrinkle my nose in disgust. Not because of your actions, mind you, but because of the fact that the media had the nerve to be so hypocritical! Your decision to increase the cost of this drug was not even as close to as evil as the actions of Purdue Pharma, who, as you must know, saturated the US painkiller market with the extremely addictive Oxycontin in the 90’s. They used all kinds of deceptive marketing and scientific review to fool Americans and make them believe that Oxycontin was NOT as addictive as Heroin, when in reality, it is just as addictive. This, of course, lead to the black tar heroin epidemic that plagues America to this day.

After your appearance on national news, I assumed that this would be the last we heard of Mr. Shkreli. However, you surprised and delighted a fan greatly by making several highly memorable media appearances. Your testimonial at congress, your podcast interview on VLAD, your YouTube diss of The Wu-tang Clan & the subsequent release of their 2M dollar album after the election of our first meme president. (I still haven’t heard it, fuck Wu-tang) On each appearance you were an articulate and formidable speaker, but the best part of all, and the common thread running through these appearances, was your expression of absolute glee as you uttered an intentionally shocking or offensive tidbit. The subdued gasps and scowl of those fat squares sitting in the congressional chambers were absolutely delightful and offered the same sort of release I felt when I was watching candidate Trump mopping the floor with those saps in the 2016 debates.

I am really sorry to hear that you are currently incarcerated over some bullshit prank you were playing online, offering a reward for a single stand of Hillary Clinton’s hair. I cannot believe that Clinton would use her influence to deny justice to a citizen, while she herself continues to skirt justice. To me, you are the greatest living proof of Hillary Clinton’s treasonous guilt of colluding with our enemies, subverting our democracy, and making a mockery of our justice system.

Mr. Shkreli, I hope you have some personal support to get through this difficult period of your life. From what I can gather in the media, the whole country is against you, but please don’t let this discourage you. They are also against our president. Our country has lost all shame and is now walking down the road of hypocrisy into the oblivion of totalitarianism because so many of our citizens are willing to give up their democratic responsibilities and powers, preferred to be pampered rather than challenged, and is quick to punish success.

You did nothing wrong. It’s society at large that is not good enough to have you. I doubt this would offer you much comfort, but I’d still like let you know, and this comes from the bottom of my heart, I appreciate your contribution to the world. I will be there to light a candle for you and when you expire.

Just think of what you are going through as going to college and then graduate school. Although you like posting about that biopharma b.s. most fans want to know what is going on in prison, what you plan to do afterwards, or more entertaining things such as sports/personal. Also, I thought it was ironic that you were given the same sentence as Bobby Shmurda… Some questions you might address in your personal section might be..What is the fate of your cat trashy? How old is trashy? Do you expect to see trashy after your bid? Do you have conjugal visits? Who are some cool people in prison? How many books do you plan on reading? Do you have a goal? Will you make some sort of documentary or write a book? Take any interviews? What sort of business ventures will you pursue when you are out?

I am glad you can still study medical journals and read investing books in prison. Compared to other white-collar criminals, I do not think you deserve the sentence. Elizabeth Holmes should be locked up, defrauding $10B and only paid $500k to get away.

What are your thoughts on REGN? Eylea and Dupixent are continuing to grow due to superb execution. Analysts are pissed because REGN stops giving revenue guidance. I think it is a great stock after the recent bottom at $300($31B). I entered at $330.

Did you hear about BIIB’s success in P2 of their Alzheimer’s Trial? BIIB is worth $73B after the news (15% pop). I think this is a high risk and high reward investment. They might become the new mega pharma. What are your thoughts?

Martin!!! We used to be friends on Twitter a few years ago, we even talked a time or two! I was rooting for you and still am. I’m going to write you snail mail also, but I just wanted you to know you’re in my thoughts and I’m sending you good vibes. I’m sorry this all happened but I know you’re on the right side of history. Stay strong!